New Brief: Expanding “Buy America” Rules Would Hurt U.S. Patients and Economy, Hinder Development of Coronavirus Vaccine

Expanding “Buy America” rules for prescription drugs and medical supplies would reduce patient access to drugs and further damage the economy, finds a new issue brief released today by the Center for Medical Economics and Innovation at the Pacific Research Institute.

“As the U.S. fights the coronavirus, policymakers must ensure that life-saving drugs are readily available to America’s patients,” said Sally Pipes, PRI President, CEO, and Thomas W. Smith Fellow in Health Care Studies and the brief’s author. “Imposing new ‘Buy America’ rules in the middle of a public health crisis could have a catastrophic impact – triggering shortages of critical drugs and hindering efforts to find a coronavirus vaccine.”

The Trump Administration is preparing an executive order to expand “Buy America” rules to force federal agencies to purchase more drugs and medical supplies domestically. A similar effort – the “Strengthening America’s Supply Chain and National Security Act” authored by Sen. Marco Rubio (R-Florida) and Rep. Michael Waltz (R-Florida) – has been proposed in Congress.

Under trade agreements begun in the mid-1990s, the U.S. supply chain for drugs and medical products was spread globally – benefitting patients through lower prices. Pipes cites a 2011 FDA report stating that it is up to 40 percent cheaper to manufacture active pharmaceutical ingredients overseas.

Roughly 1300 plants in the U.S. manufacture pharmaceuticals, yet most ingredients come from overseas. A “Buy America” rule would cut off U.S. manufacturers from international suppliers. With just 28 percent of key ingredients for FDA-regulated drugs made in the U.S, Pipes argues that a “Buy America” rule could lead to immediate shortages and price hikes.

“Amidst a growing recession, this new mandate would hurt our economy further, increase patient costs, and threaten innovation,” said Pipes. “Rather than shooting ourselves in the foot, we should seek better enforcement of U.S. trade deals and expand our skilled workforce to make our medical supply chain more secure.”

Instead of adopting a “Buy America” mandate, Pipes argues that U.S. trade representatives should focus on preventing other countries from violating current trade deals and infringing upon American intellectual property. Additionally, the U.S. must embrace advanced manufacturing technology to provide for more efficient production and ensure that more workers are trained in the STEM fields (science, technology, engineering, and mathematics).